The smiling faces of Paris Hilton and Ryan Seacrest made surprise looks before the Louisiana Senate for Friday's hearing on illegal gaming.
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No, they weren't personally in participation, but the world-famous stars were conspicuously consisted of in a slide presentation on social and sweepstakes gambling establishments - the controversial websites offering both totally free casino-style video games and financially rewarding prizes, such as cash, gift cards or cryptocurrency. In one ad, the fist-pumping Seacrest is seen plugging Chumba Casino, where anyone can 'bet totally free,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The sites are just 2 cogs in the multibillion-dollar industry that now discovers itself besieged by lawsuits. In the eyes of lots of video gaming corporations, not to mention claim plaintiffs and state regulators, sweepstakes gambling establishments act as traditional gambling establishments, only without the oversight, consumer securities and tax laws. So not just can they prevent the steep 24-percent federal gaming levy, but sweepstakes operators aren't based on regulative hurdles like anti-money laundering and responsible-gaming securities.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in revenue last year alone. Now the company faces allegations of illegal gaming in a New York suit that claims VGW uses celeb endorsers to 'produce a veneer of legitimacy' around its item. (See VGW's declaration listed below)

'I'm unsure" if you do not trust us, you can rely on Paris Hilton" is a winning message for companies running multibillion-dollar illegal operations out of places like Malta, Isle of Man, or US mail drops,' Friday's speaker, Howard Glaser of gaming corporation Light & Wonder, informed DailyMail.com.

Sweepstakes endorsers consist of a variety of celebrities from gambling enthusiasts Drake and DJ Khaled to swimmer Michael Phelps, as well as NBA stars Karl-Anthony Towns and Paul George - none of whom provide any distinctions in between traditional sports betting and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, among lots of sweepstakes casinos found online

Ryan Seacrest fans to dip into Chumba Casino, where lots of - but not all - video games are totally free

Drake has a deal with social sweeps gambling establishment, Stake, that he frequently promotes on social networks

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Instead, ads typically center around the social aspect of the casinos, while omitting the potential for real gambling losses.

Others tempt clients with promises of rewards. One such operator, Stake, ran a social media ad displaying Drake's vehicles, planes and mansions before rotating to video footage of the rap artist playing online casino-style games.

'Daddy, why do we have a lot money?' check out the first caption on the screen.

Another caption explained: 'Because I never quit.'

The disparity in between sports betting websites and social or sweepstakes gambling establishments is a bit complicated, however operators of the latter insist they're not included with the previous.

A spokesperson for an industry trade group, the Social and Promotional Gaming Association (SPGA), explained its members are not in direct competition with online gambling establishments and sportsbooks. Furthermore, according to SPGA data, the majority of the gamers on social-sweepstakes gambling establishments are playing for free.

'Most social sweeps consumers never ever make a purchase,' the SPGA representative told DailyMail.com. 'The minority of customers who make purchases do so in amounts far smaller sized than the common deposit or bet size at real-money online gambling sites.'

Social casinos provide consumers a possibility to play casino-style video games with buddies. Players have the option to purchase worthless currency often described as 'gold coins,' which can not be exchanged for genuine cash, but can be utilized to open different features within the games.

But within the world of social casinos exists sweepstakes video gaming, allowing customers to obtain other currency known as 'sweeps coins' that can be exchanged for money or other prizes.

And therein lies the capacity for monetary losses, like the ones claimed by plaintiffs in Florida, Georgia, New Jersey and New York City. One player informed the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the previous year after continuing to buy more coins in pursuit of cash and other things of value.

The Philadelphia 76ers' Paul George is seen promoting a Worldwide Poker occasion
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Social sweeps gambling establishment Stake ran an ad flaunting Drake's cars and trucks, aircrafts and mansions
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Karl-Anthony Towns of the New York City Knicks is another NBA star plugging VGW's Global Poker

Traditional online casinos are banned in all however seven states, which has actually helped to sustain the appeal of sweepstakes gambling establishments.

Anyone over the age of 18 can access the sweepstakes websites, which do not require usually need recognition. However, websites like Chumba will request IDs from players trying to withdraw any funds.

Many sites, like the crypto-compatible Stake, permit consumers to send mail-in requests for free sweeps coins, offered the gamers follow painfully particular directions. What's more, gamers are often rewarded with sweeps coins simply for registering, therefore providing a factor to try their hands at any variety of casino games for an opportunity to win - or lose - genuine cash.

So why are sweepstakes sites enabled to operate in 48 states, while online gambling establishments are banned in all but 7?

According to the stakeholders, their product is the complimentary casino-style video gaming, and the real-stakes competition is merely a method of promoting their bread and butter.

'Social sweepstakes video games are merely a kind of online home entertainment,' an SPGA spokesperson informed DailyMail.com by e-mail. 'No purchase is needed to play at social casinos with sweepstakes prizes. Consumers never have to spend for an opportunity to win prizes. That lack of a purchase requirement - or" consideration" - is an important distinction in between social sweeps and conventional online gaming websites like casinos.'
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Think of the manner in which McDonald's uses its yearly Monopoly video game to promote its food: Customers aren't paying to gamble, however rather they're purchasing hamburgers and french fries that offer them the chance to win rewarding prizes, such as a $1 million jackpot.

And without a purchase requirement, or 'factor to consider', the video game itself doesn't satisfy the definition of sports betting in the US.

'Sweepstakes are an enduring technique for promoting all sort of daily services in the United States, whatever from hamburgers to magazine memberships to coffee and home improvement shops,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promos are routinely used by a who's who of home names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to many sports betting market experts, that argument doesn't cut it.

For starters, video gaming lawyer Daniel Wallach points out, McDonald's Monopoly game does not run forever. Rather, it has a distinct start and end, consequently suggesting the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being utilized to promote real products like french fries, shakes, and the Filet-O-Fish.

'They do not last permanently and they're usually not tied to casino-style games of possibility,' Wallach told DailyMail.com. 'They're simply money free gifts.

'The sweepstakes [casinos] have none of the attributes typically associated with McDonald's-style sweepstakes promotions,' Wallach continued. 'Besides running in perpetuity, the sweepstakes gambling establishments use" casino-like" payouts, normally 80 percent or more of incomes, whereas the common payout portion for a temporary advertising sweepstakes is a minor share of the earnings made by the company [normally less than one percent]'

Wallach is quick to compare the online social sweeps casinos to the web cafes that emerged in Florida, using consumers the opportunity to play casino-style video games for genuine rewards. A number of those brick-and-mortar facilities have actually because been shuttered over allegations of prohibited gambling.

DJ Khaled is amongst numerous celeb spokespeople for VGW's Global Poker brand name

Now, Wallach argues, social sweeps gambling establishments should deal with similar analysis.

'These differences are not arbitrary,' Wallach said of social sweeps casinos. 'They have consistently been cited by courts and state chief law officer as essential aspects in identifying that a sweepstakes promotion remained in fact a guise for unlawful sports betting.'

Among the gambling establishment market's leading trade companies, the American Gaming Association, is now pressing lawmakers to examine sweepstakes operators and, in many cases, enact new legislation on the problem.

'Consumers are being denied of protections and states are passing up substantial tax and income opportunities as this sports betting replaces that conducted through regulated channels,' read a well-circulated AGA memo.

And after that there are the complainants who have sued social casinos in more than a lots states.

Sweepstakes casino operators paid a combined $14.2 million in 4 separate cases in Kentucky without admitting any misbehavior, according to the Washington Post. Meanwhile VGW concurred to pay $11.75 million in one class-action claim, stating the settlement was made to prevent legal expenses and continued litigation.

Michael Phelps has actually signed a handle the VGW Group, which owns Global Poker

In the newest lawsuit, which is largely comparable to its predecessors, New york city state residents Lamar Prater and Rebecca Pratt both claim to have actually lost well over $1,000 to VGW, which is explained in the filing as an 'illegal gaming enterprise. '

Apple and Google have actually likewise been named as accuseds in claims for hosting the sweepstakes websites. But unlike VGW, neither tech company reacted to DailyMail.com's ask for comment.

'We normally do not comment on matters before the courts,' a VGW spokesperson informed DailyMail.com by means of e-mail. 'However, we note that this claim has only simply been submitted with the court and VGW has not been formally served.

'We have full self-confidence in our compliance with all laws and guidelines where we operate, and remain confident about the future,' the spokesperson continued. 'We continue to offer our free-to-play video games throughout the majority of North America, as we have for more than a years, developing not just great games, user experiences and home entertainment, but also guaranteeing this is done safely, properly and at the greatest level of standards.

'More broadly, we 'd reiterate that class actions and other lawsuits and arbitrations are fairly typical throughout the online social games industry (and the US more broadly), and our basic practice is that we intend to intensely defend any claim which might be brought against us.'

The concerns between traditional online gaming and sweepstakes gambling establishments might prove bothersome for some celebrity endorsers.

Towns, a star center with the Knicks, and the 76ers' George both endorse VGW's Global Poker brand name while the NBA is partnered with standard video gaming titans like FanDuel and DraftKings.
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'It's ironic that professional athletes are hawking unlawful sports betting 'sweeps' websites while at the very same time the leagues wish to project a strong stance versus prohibited sports betting - particularly when trying to tamp down the periodic sports betting scandal,' Glaser told DailyMail.com.

It was just eight months ago that Toronto Raptors forward Jontay Porter received a life time restriction from the NBA over accusations he conspired with bettors. However, to be clear, Porter's scandal is unassociated to anything including social or sweepstakes casinos.

Along with VGW, Apple and Google are being sued for hosting supposedly illegal sports betting sites

Regardless, Glaser sees sweepstakes casinos as a significant concern for leagues such as the NBA.

'I 'd anticipate that a league crackdown on athletes backing sweepstakes sites is a matter of when, not if,' Glaser added.

Neither an NBA spokesman nor the gamers' agents reacted to DailyMail.com's demands for comment. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps also overlooked to respond to DailyMail.com emails.

Asked if their star endorsers have a responsibility to explain to customers the distinctions and resemblances in between iGaming and sweepstakes casinos, VGW insisted there is absolutely nothing more that needs to be done.

'We have complete confidence in our influencer and ambassadorial partnerships, and our service practices more broadly,' the representative stated. 'Some of our worths are" our gamers precede" and" we do what's right", and we put our worths at the core of everything we do.'

Glaser, an outspoken challenger of sweepstakes sites, sees things differently.
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'Celebrities who lend their names to shady unlawful gaming websites are, at a minimum, putting their reputations at danger as well as courting civil and class actions by consumers who declare damage,' Glaser said. 'There is also some danger that state regulators and state attorney generals of the United States rope star endorsers into enforcement efforts for helping with unlawful gambling.'

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